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John Simpson: The hazards now known but solutions must be found

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John Simpson

John Simpson

Kevin Scott / Presseye

John Simpson

Business prospects in 2022 will be affected by a series of national and international events and influences on trade and payments which, for the more adaptable businesses, may be converted into welcome opportunities. For many businesses, recognition of the influence of changes in trading conditions will be critical to facilitate stronger and better results.

The business horizon is cluttered with possible obstacles. As the new year opens, the calling card for attention draws attention to several dynamic processes.

These include:
⬤ Dealing with an evolving green energy agenda
⬤ Coping with the amended rules following mutations of the covid-19 disease
⬤ Maintaining effective employee output, working at home or working at ‘bench’
⬤ Adapting to the reshaping of the UK-EU Protocol on trade within the UK and EU
⬤ Ensuring a stable labour force, coping with skills shortages
⬤ Adjusting to changing support incentives in farming
⬤ From Brexit to new relationships

Although it may be tempting to think of the business environment in 2022 as facing an unusually diverse and complex series of changes, there is good reason to see the immediate prospects as being very demanding, more demanding than normal evolutionary changes.

The gradual adoption of a green energy agenda will demonstrate a feature of several of these organisational pressures. Adopting green energy objectives may mean switching to contracting to buy electricity from a renewable producer. Indirectly, the green objectives may influence industrial processes, changing the choice of transport arrangements including the conspicuous change to electrically charged vehicles. A strong lead on these ‘green’ credentials will come when the Department for the Economy publishes its promised review of energy strategies.

Many organisations are facing difficult choices in maintaining production and/or sales against a background of flexible employment arrangements. Supervising work output arrangements when a large proportion of employees are working flexibly, including several days of working from home. Most employers and many employees are commending the ease with which they have adjusted to working from home.

Recruitment, induction, skills enhancement, promotion decisions and increasing productivity may all prove less efficient with the continuing Covid-19 restrictions.
A major uncertainty for businesses in 2022 will be operating within the EU-UK Protocol. Businesses which send their output from Northern Ireland to GB or Ireland must hope that their trading flows can be easily maintained.

The NI Protocol is designed to enhance these outlets. However, businesses which rely on incoming materials or goods arriving from GB may face, at the least, a larger amount of paperwork or, if negotiations ensure that unfettered trade can continue, the arrival of extra paperwork to facilitate that trade may be a by-product.

The negotiations between the EU and UK authorities are a critical part of the agenda posing possible threats to business continuity.
Looming larger than the other problems to be solved is an agreement between the EU and the UK Government that allows the protocol to function as its designers intended.

A better practical solution might be a series of relaxations to the rigour of an EU border in Northern Ireland for goods coming from GB. The evidence to date points to a series of special waivers.

Another issue to be tackled is the amendment of the support for farming in a context where farming must pay a big price to reduce unwelcome emissions.

This year brings a test of the serious resolve on our business leaders and our Government ministers to ease the way to a 50% reduction in harmful emissions by 2030. Next year brings an early test of the will to tackle these issues.

Businesses face a demanding new year. However, adaptable management should be able to ensure continuing economic recovery. π

John Simpson is an economist


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